Commentary: We can’t afford to let the new NAFTA drive up drug prices
By Raja Krishnamoorthi
It’s no secret that Americans pay more for prescription drugs than people in most other developed nations.
According to a CNN report, the prices Americans pay on average are two to six times higher than the rest of the world. For example, a common acid-reflux drug costs $215 in the United States but $33 in the Netherlands. A recent Kaiser Family Foundation poll found that more than 90 percent of Americans favor allowing Medicare to negotiate with drug manufacturers, and 80 percent of Americans say that current drug prices are unreasonable. In addition, more than half of Americans say lowering drug costs needs to be a top priority for Congress and the White House.
This is why I’m very concerned that a provision in the renegotiated NAFTA, now called the U.S.-Mexico-Canada Agreement, could raise drug prices for millions of Americans. Under current law, prescription drugs created from inorganic chemicals are granted a 20-year patent that prevents other companies from making the drug during that time period. Many manufacturers will apply for patents years before their drug comes to market to maintain rights over new chemical compounds. Because it can take years to get a new pharmaceutical approved by the FDA, many drugs enter the market with fewer than 10 years left on the original 20-year patent.
Drug manufacturers also are entitled to claim a period of “market exclusivity,” which begins only when the drug is approved by the FDA. The exclusivity period effectively has the same impact as a patent: For a guaranteed period of time, the original manufacturer will be protected from competition. The only difference is that the “exclusivity” period only begins once the drug is able to be sold. For most inorganic drugs, the exclusivity period varies depending on the illness the drug addresses and the potential market share of the drug.
Thanks to advances in medical technology, there is another type of pharmaceutical product called a “biologic,” which is made from living organisms.
Biologics currently represent only 2 percent of all prescriptions, but they account for 26 percent of total consumer spending on drugs due to the popularity of medications including the arthritis treatment Humira, which is synthesized from antibodies, and the long-acting insulin Lantus, which is derived from conventional, fast-acting insulin.
Since it is impossible to patent a living organism or other “natural phenomena,” American manufacturers of these biologics are granted a 12-year period of exclusivity once the FDA grants approval.
Knowing that competitors will be coming to market at the end of the exclusivity period forces the pharmaceutical industry to continually invest in research and development. This healthy competition helps drive revolutionary new treatments.
There were proposals late in the Obama administration to reduce the current 12-year period to seven years to strengthen competition and decrease drug prices, but Congress did not act on this issue. Now that President Donald Trump has made the reduction of drug prices a priority, reducing this exclusivity period is one of several options under consideration.
However, the USMCA proposes to sync up exclusivity periods across all signatories: Mexico, Canada and the United States. This would mean no single country could shorten this period without the approval of the other two countries. Since drug pricing will be a top priority for the next Congress starting in January, this would effectively tie Congress’ hands just as we need every tool in our toolbox to combat these rising drug prices.
We should not allow this treaty — or any other — to prevent Americans from taking action to lower drug prices and make it easier for generic biologics to come to market. These decisions should be made in the context of our debate over prescription drugs, not shoehorned into unrelated trade policy.
This further underscores why Congress must seriously investigate the underlying reasons Americans face such high prices for prescription medication. While exclusivity periods are important to help companies recoup their investments, anti-competitive restrictions ultimately harm consumers.
As the ranking Democrat on the House Oversight Committee’s health care subcommittee, I plan to work with my colleagues — regardless of party — to investigate why prescription drug prices are so high for Americans relative to consumers in other countries. I am hopeful that we can come up with specific steps to bring those drug prices down.
Democrats and Republicans may disagree on many things, but no one wants to see their constituents priced out of the lifesaving drugs they need.
President Trump made the issue of high prescription drug prices a focus of his 2016 campaign, and the next Congress has an opportunity to work with him for a solution.
Many Americans are distressed and disheartened by the hyperpartisanship and finger-pointing in Washington today. Making prescription drugs more affordable would demonstrate that we are capable of working together to address the critical challenges that millions of families face every day. They are counting on the new Congress for help, and we must put aside our differences and do our best to find the way.
Raja Krishnamoorthi represents Illinois’ 8th Congressional District in the U.S. House of Representatives.